Markets Hold Firm as Small Caps Show Strength While Retail Tests Key Level

Resiliency Is the Headline 

Thursday’s market action can be summed up in one word: resiliency. 

Granddad Russell 2000, represented by IWM, held its 200-day moving average, showing surprising strength in small caps. 

This matters. 

Small caps are often a barometer for: 

• Domestic growth  
• Risk appetite  
• Economic confidence  

Holding the 200-day moving average suggests that, despite uncertainty, the market is not ready to roll over just yet. 

Transportation: A Growing Mystery 

Transportation IYT, however, is telling a more puzzling story. 

Despite: 

• Rising oil prices  
• Elevated yields  

The transportation sector (IYT) continues to hold its ground. 

Historically, higher energy costs tend to pressure this sector.

Yet for now, transportation is not confirming weakness. 

This divergence raises a key question: 

• Is the market more resilient than expected?
• Or has the impact of higher costs simply not been felt yet? 

The Bond Market: Still Holding Together 

Meanwhile, the bond market remains steady. 

Even with yields at elevated levels, the long bond has not broken down. 

This underlying stability is important because: 

• Disorder in bonds often spills into equities  
• Stability in bonds can support risk assets  

For now, bonds are not signaling panic. 

Which brings us to the most important player in this setup. 

Granny Retail: Testing a Critical Floor 

Granny Retail represented by XRT is approaching a key technical level. 

The chart is now showing a potential triple bottom formation: 

• May-June 2025  
• November 2025  
• March 2026  

This is not just a pattern; it is a test of consumer resilience. 

Retail reflects behavior: 

• Spending habits  
• Confidence  
• Economic participation  

And right now, that behavior is sitting at a decision point. 

The key level to watch is 77. 

If this level holds: 

• The market may be anticipating that current geopolitical tensions can be navigated  
• Risk assets could find support  
• A more constructive outlook could develop  

Markets are forward-looking. 

Holding support suggests confidence in future stability. 

The Risk Scenario 

But if 77 breaks: 

• The triple bottom fails  
• Consumer weakness becomes more pronounced  
• The risk of a deeper correction increases significantly  

This would shift the tone from resilience to caution — quickly. 

Actionable Framework 

Here’s how to approach it: 

• Above 77 (and holding)
  → Constructive
  → Watch for broader market support  

• Below 77
  → Defensive posture
  → Increased downside risk  

And most importantly: 

• Watch the relationship between Granny Retail and Granddad Russell 

Because together, they tell the story of: 

• The consumer  
• And economic growth  

Bottom Line 

The market is holding together — for now. 

• Small caps are resilient.
• Transportation is puzzling.
• Bonds are stable. 

But the real decision lies with the consumer. 

ETF Summary  

(Pivotal means short-term bullish above that level and bearish below)  

S&P 500 (SPY) Classic reversal if holds 645  

Russell 2000 (IWM) Classic reversal if holds 242 

Dow (DIA) Classic reversal if holds 455 

Nasdaq (QQQ) Classic reversal if holds 560 

Regional banks (KRE) 64 key number to hold 

Semiconductors (SMH) 380 a good place for this to hold if good 

Transportation (IYT) 73 now support 

Biotechnology (IBB) 164 now support 

Retail (XRT) Triple bottoms off of June and November 2025, and March 2026 lows?  

Bitcoin (BTCUSD) 68k now pivotal resistance and 65k support 

Video here: